Opportunity is knocking!

Hi Jess, can I ask how long the typical time is on an equity cashout, from initial conversation to having the funds available? Thanks

 

@Blueskies If with the same bank, it can be about 3 weeks...but depends on the bank - some are super slow atm.

 

IMO buying now is gambling, nothing more. Fine line between investing and gambling sometimes but it's about information. I wouldn't buy leading into the election last year given the uncertainty. The liberals won, APRA requirements were lifted, a rate cut was likely. I bought property a few weeks after the election, for basically the same price I could have bought it before.

Buffet et al is basically a large set of quotes that contradict each other and can be applied to justify any decision at any time. You might chose 'buy when others are fearful' but right now I'm chosing 'wealth is the transfer of money from the impatient to the patient'.

 

If you equity cash out and your stocks go pear shape and then real estate crashes.... that's a double whammy of pain.

 

If done at the same bank direct can be within 3-4 days

 

Of course, but at the end of the day isn't it really just about your total debt to equity ratio? To me I feel totally at ease with having an 80% LVR with a decent chunk of that made up up equity used for share purchases, if anything I see that as better diversification than the same ratio held completely in property.

 

I agree absolutely. But ( and not trying to fear monger but I'm always super risk focused) in times like this your equity in RE could drop faster then you can re-evaluate what your LVR is changing to. And negative equity could rear it's ugly head. I'm not saying I think this is gonna happen, but it's something to factor in imo.

 

Imagine getting margin called on shares and having to sell property because share leapfrogged down

 

Storm Financial anyone.....

 

All the more reason to get my hands on what I can now! I hear what you are saying but I don't have any margin loans or commercial loans, I can't see the banks coming after me if my LVR drops, I am just another humble residential property investor. If I find myself in a negative equity position it will be along with a few million other people...

 

I'd hate to ever be in that situation. Probably why I'd personally never use leverage, or only a small amount of it in stocks. I can't accept the risk.

 

At the end of the day, you gotta do what's right for you. I've taken some very risky positions in the past. The one thing I always ask myself is, can I recover from this decision if it goes absolutely **** , both financially and psychologically.

 

Absolutely

Should never leverage in shares because market moves too wildly. You could be right but get stopped out. If want to gamble, better off buying out of money long dated options on a share or index.

 

Depends on the bank! But good to know!

 

No worse than leveraging into property using equity and having it go down. It's just more obvious...and easier to get out (which can be a good and a bad thing. again, all about the plan and the psychology.)

 

That wouldn't happen unless you got equity and then used it to secure a margin loan. That's super risky. If 'just' using equity, as long as you can pay the loan, you're all good regardless of the share price. No margin calls b/c the shares aren't used as security.

 

You cant compare yields of houses with yields of shares, because houses don't give anywhere near the compounding growth in earnings, which push the price up of shares which make the yields appear low. Your yields increase with falling asset price and vice versa. For example 2 years ago A2M was about $4.00 , it is currently earning a growing10% on that $4.00 , it doesn't pay a dividend reinvesting and growing the earnings has driven a return of 100% per year since than with a share price of $15.70. Your $140k in shares would be worth as much as your depreciated house in 3 years. Which will take 30 years to pay off. . Got a way better return than your 12% in just a few hour yesterday on the shares I mentioned I had just bought, DDR a 6% growing yield and 12 %CG, RFF a 7% yield and a 10% GC.

 

The trouble is how do you pick the bottom. Would you worry if the shares went down further after purchase?

 

Personally, I would not care if I picked the bottom. It's more about buying quality assets for a good price. It doesn't have to be the best price or nothing for me. It also depends on my overall strategy and how these assets help me reach my financial goals.

I'm looking at VAS as a third income stream after super and residential property. The more VAS shares I hold, the higher my third income stream will be.

VAS was trading for $90.82 on Feb 20. If I bough $100,000 shares on that day, I would hold around 1,100 shares.

If VAS drops to $60 per share, and it could, the same $100,000 would buy me 1,666 shares.

Considering these are a 30 to 40 year hold for me, would it really affect me or my strategy if the price dropped further to $50? I mean besides feeling like dam, I wish I waited until the price dropped to $50. Financially, I would be a lot better off buying VAS for $60 vs $90.

This is assuming I have not purchased using a margin loan, which I am not interested in.

 

That's how I look at it, but if vas dropped further to say $40 it would be hard..